The  Prejudice  Against 
the  Railways 


An  Address 

Before  the  Chamber  of  Commerce,  Lynchburg,  Virginia 
April  30,  1914. 


By 

FAIRFAX  HARRISON 

President,  Southern  Railway  Company 


Digitized  by  the  Internet  Archive 
in  2015 


https://archive.org/details/prejudiceagainstOOharr 


6 1932 

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THE  PREJUDICE  AGAINST  THE  RAILWAYS. 

One  who  has  been  engaged  in  the  railway  industry  practically  all 
of  his  business  life,  who,  relying  on  the  candor  of  his  intentions,  has 
striven  earnestly  and  laboriously  to  achieve  progressive  improvement  in 
the  efficiency  of  personnel  and  materiel  of  the  service,  who  has  always 
been  actuated  by  a determination  to  adjust  his  business  practice  to  what 
he  understands  to  be  the  public  expectation,  who  believes  that  fair  dealing 
and  frank  discussion  are  the  surest  means  of  success,  but  who  has  not 
for  a moment  lost  sight  of  the  fact  that  a railway  is  not  an  eleemosynary 
institution : that  its  purpose  is  the  reward  of  those  who  have  adventured 
their  capital  as  well  as  to  serve  the  public;  such  an  one,  I say  (and  I 
know  that  there  are  many),  must  sometimes  pause  to  take  account  of 
the  undoubted  fact  that  for  some  years  there  has  been  a steady  growth 
of  public  disapprobation  of  his  profession. 

I venture  to  claim  that  no  American  boy  begins  life  criticising  and 
contemning  the  railways.  On  the  contrary,  most  inland  boys  have  their 
imagination  and  ambition  first  stirred  by  the  physical  aspect  of  life  on  the 
rail.  They  see  the  train  crews  at  work,  they  admire  the  demonstration 
of  mighty  power  and  the  shining  beauty  of  the  locomotives : they  hear 
tales  of  manly  hardship  and  derring-do  such  as  quicken  the  heart  beats 
of  every  one  with  red  blood  in  his  veins  and  so  they  make  heroes  of 
those  men  of  the  throttle  and  the  lantern  who  come  periodically  out  of 
the  great  unknown  into  the  narrow  confines  of  their  young  lives  to  go 
again  like  migrating  birds  to  mysterious  “points  South,”  which  are  only 
names  to  the  untraveled  lad.  The  railroad  is  to  the  inland  boy  what  the 
ship  is  to  the  boy  bom  at  a seaport — the  outward  and  visible  sign  of  a 
world  of  adventure. 

So  it  is  that  many  boys  cherish  an  ambition  some  day  to  work  on 
the  railway  and  they  believe  it  to  be  an  honorable  plan  for  an  honorable 
and  useful  life.  It  is  only  later  when  the  germs  of  an  endemic  social 
malady  invade  the  system  that  that  blind  and,  at  times,  apparently  unre- 
lenting hatred  of  the  railway  corporation,  of  which  for  years  we  have 
had  frequent  demonstration,  feeds  itself  in  the  average  man  upon  all  the 
temptations  of  personal  selfishness,  upon  the  cant  phrases  of  the  ambi- 
tious demagogue,  upon  the  poisoned  political  economy  of  the  muck- 
raking magazine,  to  blaze,  with  orgiastic  fury,  in  laws  and  regulations 
such  as  no  virile  man  would  ever  accept  for  the  conduct  of  his  own 


private  business.  When  he  thinks  of  such  things  and  his  conscience 
works,  as  it  sometimes  does,  the  average  man  justifies  himself  with 
belief  that  a “great”  corporation  can  submit  to  oppression  and  injus- 
tice, or  can  adjust  its  business  practices  to  methods  which  an  individual 
could  not  brook.  He  finds  his  justification  then  somewhat  in  mere  size 
of  the  sacrificial  victim.  But  there  are  two  more  potent  causes  of  his 
discontent,  viz.:  a latent  inherited  class  prejudice,  and  the  remoteness 
of  management. 

Of  these  causes  of  current  misunderstanding,  the  last  named — re- 
moteness of  management — is  the  one  which,  in  my  judgment,  best  justi- 
fies much  of  the  criticism  of  the  railways. 

There  are  few  American  men  who  would  lend  themselves  to  the 
despoiling  of  their  immediate  neighbors.  We  all  know  how  public 
opinion  regards  those  who  do  that  thing.  I know,  too,  that  where  com- 
munities are  acquainted  with  the  men  who  manage  the  railways  and 
respect  them  in  their  personal  lives  and  bearing,  the  pressure  of  hatred 
of  what  they  represent  is  less.  The  psychology  of  this  is  not,  however, 
as  simple  as  it  would  seem  to  be.  Most  railway  managers  have  experi- 
enced a curious  differentiation  in  the  public  mind  between  the  individual 
reputation  of  the  officer  and  opinion  of  his  official  acts.  That  which  is 
hated  is  not  the  man  who  exercises  the  power  and  who  makes  the  deter- 
mination which  the  public  considers  unreasonable,  but  the  impalpable 
thing  known  as  “the  Company,”  which  somehow  is  distinguished  from 
the  officers  and  even  from  the  stockholders,  who  choose  the  officers. 
This  seems  to  be  the  explanation  of  the  reluctance  of  juries  to  impose 
criminal  responsibility  upon  officers  for  their  corporate  proceedings.  We 
must  here  recognize  a prejudice,  for  the  character  of  a corporation  is 
neither  better  nor  worse  than  that  of  its  responsible  manager,  and  it  must 
follow  that,  as  the  character  of  the  manager  is  understood,  opinion  of 
him  will  more  and  more  displace  preconceived  opinion  of  the  corporation. 

I deem  it,  therefore,  an  obvious  duty  upon  those  who  have  the  re- 
sponsibility of  the  management  of  our  railways  to  spend  as  much  of  their 
time  as  they  can  in  cultivating  friendly  and  human  relations  with  the 
communities  they  serve.  They  can  do,  and  for  several  years  the  best 
of  the  American  railway  managers  have  done,  much  to  plant  the  seeds 
of  understanding  and  mutual  forbearance  by  studying  at  first  hand  the 
point  of  view  of  the  shipper  and  by  revealing  themselves  as  human  men 
seeking  to  do  their  duty  under  difficulties. 

So  far  as  railway  managers  are  concerned,  it  is  not  necessary  to 


o 


look  into  the  past.  If  they  were  once  arrogant  and  arbitrary  and  aloof, 
as  a class,  all  the  world  knows  that  they  were  chastened  by  an  outraged 
public  opinion  and  the  heavy  hand  of  the  law.  Those  who  typified  the 
sins  of  the  past  have  mostly  passed  away.  Few  of  them  reaped  the  crop 
of  tares  which  grew  on  the  fields  they  cultivated.  They  have  been  suc- 
ceeded by  another  generation — men  who  have  been  from  boyhood  in  the 
railway  service,  as  distinguished  from  the  control  of  the  railways,  who 
have  been  all  their  lives  in  contact  with  the  people,  who  are  actuated  by 
principles  of  service  rather  than  oppressive  exploitation  of  opportunity: 
but  they  find  themselves  in  an  environment  of  prejudice  which  was  en- 
gendered not  by  themselves  but  by  their  predecessors.  They  are  under 
the  awful  curse  of  Yahweh,  “The  sins  of  the  fathers  shall  be  visited  upon 
the  children.”  It  is  conceivable  that  the  American  people,  ingrained 
though  it  may  be  with  Hebrew  traditions,  will  not  apply  this  lash  of 
serpents  forever  and  without  relenting.  I believe  that  it  is  only  necessary 
for  them  to  become  convinced  that  the  present  generation  of  railway 
managers  is  seeking  simply  to  do  their  duty  and  to  serve  efficiently,  to 
reinstate  them  in  the  high  place  in  public  esteem  to  which  the  nature 
and  the  importance  of  their  service  entitles  such  of  them  as  do  well.  I 
have  had  opportunity  to  know  the  fellowship  of  the  railway  managers 
iii  the  United  States  today,  and,  considering  them  as  a class,  I challenge 
any  other  class  of  the  community  to  match  them  for  courage,  for  unre- 
mitting labor,  for  high  ambition  and  for  good  intention : and  I believe 
that,  as  the  public  knows  them,  it  will  grant  them  the  reward  of  good 
opinion  and  respect  which  I myself  have  for  my  colleagues  in  the  service. 
They  are  men  in  the  way  literally  to  realize  Ruskin’s  definition  of  an 
artist  as  “a  person  who  has  submitted  to  a law  which  it  was  painful  to 
obey,  that  he  may  bestow  a delight  which  it  is  gracious  to  bestow.” 

If,  then,  the  American  people  and  those  who  are  charged  with  the 
active  responsibility  of  management  of  our  railways  are  in  a fair  way 
to  do  what  the  Knights  in  the  Faery  Queen  did  after  a soul  searching 
combat — the  poet  says  they  usually  “affriended” — I recognize  a greater 
difficulty  in  solving  that  other  factor  in  the  problem  of  the  railways,  to 
which  I have  referred,  namely:  class  hatred. 

In  speaking  to  a body  of  men  engaged  in  those  manifestations  of 
industry  known  as  manufacturing  and  distribution,  I am  speaking  to 
men  who  in  their  own  business  experience  are  trained  to  understand  the 
problem  of  management  of  a railroad.  They  have  seen  the  railroads 
regulated : they  have  contributed  for  their  own  advantage  to  the  creation 


of  the  public  opinion  which  accomplished  that  regulation,  and  they  have 
largely  harvested  the  fruits  of  that  regulation : but  they  are  now  begin- 
ning to  realize  that  they  have  unloosened  a beast  which  is  likely  to  raven 
at  their  own  doors  before  it  is  chained,  if  ever  again  it  is  to  be  chained. 
The  principle  of  the  interference  of  government  in  private  industry  is 
not  likely  to  be  applied  forever  merely  to  railways,  or  even  to  those  ag- 
gregations of  other  forms  of  industry  known  as  trusts.  We  all  feel  every 
year  more  and  more  the  hand  of  the  government  in  our  private  affairs, 
and,  unless  the  public  conscience  is  diverted  to  something  else,  as  it  might 
be  by  a great  and  cruel  war,  which  God  forbid !,  we  are  likely  to  see  a 
steady  expansion  of  the  domain  of  the  sovereign  (who,  in  our  civiliza- 
tion, is  evidenced  by  the  representative  legislature)  on  social  questions 
affecting  every  man  engaged  in  the  management  of  industry,  or  the 
ownership  of  the  tools  of  industry.  That  means  the  small  manufacturer 
as  well  as  the  large  manufacturer:  the  small  employer  of  labor  as  well 
as  the  large  employer  of  labor.  At  the  moment  this  tendency,  so  far 
as  it  has  been  diverted  from  its  earliest  hostages — the  managers  of  the 
railways — is  directed  towards  that  class  of  the  community  which  is  dim, 
mysterious  and  distant — the  Capitalist  and  his  agent,  the  Banker. 

In  a purely  agricultural  civilization,  such  as  we  find  in  large  parts 
of  the  United  States  today,  and  such  as  persisted,  until  the  beginning  of 
the  last  century,  practically  all  over  the  world,  there  is  an  inherited  tradi- 
tion of  hostility  to  the  banker.  We  find  expression  of  it  in  our  earliest 
records.  When  the  Hebrew  people  lived  exclusively  upon  agriculture, 
their  law  (Exodus  22:25)  prohibited  the  taking  of  interest  on  a loan — 
what  has  been  translated  usury.  The  farmer  could  find  no  justification 
for  such  a practice,  for  he  was  then,  as  he  is  today,  in  the  habit  of 
lending  what  he  has — his  seed,  his  cattle,  his  tools — to  a neighbor  in  tem- 
porary need,  freely  and  without  expectation  of  reward.  He  made  his 
living  in  Biblical  times,  as  he  makes  it  today,  by  selling,  not  by  lending, 
what  he  produced.  This  also  was  the  sentiment  of  the  primitive  Romans, 
when  they  too  were  a purely  agricultural  people.  In  one  of  the  earliest 
Latin  books  which  has  come  down  to  us  this  same  thought  is  expressed 
by  old  Cato  the  Censor,  who,  two  thousand  years  ago,  had  felt  the  stir- 
rings of  what  we  call  modern  industry,  of  a far  conducted  commerce, 
but  still  apologized  for  the  ancient  prejudice  of  the  farmer. 

“The  pursuits  of  commerce,”  says  Cato,  “would  be  as  admirable 
as  they  are  profitable  if  they  were  not  subject  to  so  great  risks:  and  so 
likewise  of  banking,  if  it  was  always  honestly  conducted.  For  our 


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ancestors  considered,  and  so  ordained  in  their  laws,  that,  while  the  thief 
should  be  cast  in  double  damages,  the  usurer  should  make  fourfold  resti- 
tution. From  this  we  may  judge  how  much  less  desirable  a citizen  they 
esteemed  the  banker  than  the  thief.” 

At  every  session  of  Congress,  at  every  meeting  of  a State  legisla- 
ture, we  hear  vocal  expression  of  distrust  and  suspicion  of  the  banking 
community,  specifically  what  the  popular  imagination  terms  generically 
Wall  Street.  One  who  has  been  constantly  on  the  go,  as  I have  in  recent 
months,  meeting  people  in  many  communities,  realizes  that  this  is  a deep 
seated  sentiment  of  the  American  people  today.  I do  not  intend  to  hold 
any  brief  for  the  bankers  as  a class.  In  the  railway  industry  we  have 
our  own  troubles,  and  the  bankers  are  amply  able  to  defend  themselves, 
but  I am  glad  of  an  opportunity  to  remind  business  men  of  what  the 
banker  means  to  us  all  under  existing  conditions. 

Time  was  when  it  was  generally  believed  that  the  railroads  were 
making  vast  profits  because  they  handled  millions  of  revenues.  Many 
there  were  who  purported  to  disbelieve  the  statements  of  the  published 
accounts : comparatively  few  there  were  who  ever  read  them.  It  was 
enough  to  know  that  the  figures  dealt  in  millions  to  believe  they  were 
unholy.  Then  came  the  regulation  of  the  system  of  railroad  accounts, 
and  with  it  an  appreciation  by  most  intelligent  men  that  accounts  kept 
under  the  supervision  of  a government  commission  were  probably  rea- 
sonably correct,  and  if  they  showed,  as  they  did  show,  that  the  profits 
were  not  large  when  reduced  to  the  unit  of  investment  represented,  or 
of  service  performed,  then  resort  must  be  had  elsewhere  to  find  the 
"nigger  in  the  woodpile.” 

The  American  people  are  not  yet  entirely  convinced  that  a railroad 
is  a precarious  industry  subject  to  general  economic  laws,  though  they 
are  rapidly  coming  to  that  appreciation.  Because  it  has  been  demon- 
strated that  there  are  thieves  and  buccaneers  in  the  railway  industry, 
as  well  as  in  most  other  forms  of  human  activity,  the  popular  search  has 
always  been  to  find  whither  have  gone  the  vast  “profits”  which  are  believed 
by  many  to  be  a necessary  incident  of  control  of  a system  of  railways. 
It  now  seems  likely  that  publicity  will  demonstrate  that  this  suspicion 
of  all  railroad  bankers,  like  the  suspicion  of  unlawful  profits  of  the  rail- 
roads themselves,  is  a delusion.  The  recent  publication  by  a great  bank- 
ing house  in  New  York  of  the  details  of  its  accounts  with  the  New 
Haven  Railroad  revealed  to  an  astonished  world  that  over  many  years 
of  the  largest  financial  transactions  the  bankers’  profits  averaged  seven- 


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teen  thousand  dollars  per  annum.  This  may  well  give  us  all  pause  in  our 
preconceived  opinions,  and,  in  further  aid  of  clear  thinking  as  to  your 
and  my  relations  to  the  bankers,  I venture  to  say  in  conclusion  a word 
as  to  what  these  bankers  do  for  you  and  for  me. 

Every  one  of  you  has  a large  personal  interest  in  the  perfection  of 
the  Southern  Railway  as  an  instrument  of  commerce.  I myself  have  a 
personal  ambition  and  a steady  determination  to  accomplish  every  year  a 
step  towards  the  realization  of  your  interest  in  this  respect.  To  do  that 
will  require  bringing  into  the  South  many  millions  of  new  money.  We 
cannot  hope  to  earn  from  our  service  to  the  Southern  people  all  that  we 
need  to  spend  on  these  railroads  as  fast  as  we  must  spend  it.  Even  if 
we  devoted  all  of  our  income  to  that  end,  and  for  many  years  we  have  so 
devoted  most  of  it,  the  agricultural  and  industrial  South  is  growing  so 
fast  that  we  could  not  keep  up  with  it,  much  less  keep  ahead  of  it  and 
so  help  it  to  grow.  Neither  is  the  South  itself  yet  ready  to  provide  the 
capital  by  buying  our  securities.  Under  the  operation  of  the  new  income 
tax  law  we  have  had  an  opportunity,  never  before  possible,  to  ascertain 
where  and  by  whom,  many  of  our  railway  securities  are  held.  In  this 
way  we  have  identified  a certain  representative  block  of  one  hundred  and 
ten  million  dollars  of  Southern  Railway  bonds  and  find  that  they  are  held 
not  only  in  New  York  but  in  most  of  the  States  of  the  United  States  and 
in  many  foreign  countries  and  by  nearly  eleven  thousand  individuals. 
Of  this  total,  less  than  three  and  a half  million  dollars  is  held  by  seven 
hundred  individuals  resident  in  the  States  the  Southern  Railway  serves, 
and  sixty  per  cent  of  these  holdings  in  the  South  are  in  the  two  cities  of 
Richmond  and  Louisville.  This  demonstrates  that  the  money  we  have 
secured  for  the  improvement  of  the  Southern  Railway  in  the  past  has 
been  drawn  not  from  a few  rich  men,  but  from  an  army  of  investors 
having  at  stake  an  average  of  not  much  more  than  $10,000  apiece,  and 
that  the  South  itself,  which  has  had  the  benefit  of  the  expenditure  of 
the  money  in  the  promotion  of  an  unexampled  growth  of  prosperity,  has 
as  yet  contributed  only  three  per  cent  of  the  capital. 

Until  the  South  is  prepared  to  support  our  capital  requirements  on 
a larger  scale,  we  must  then  look  to  those  who  have  established  channels 
for  the  facile  distribution  of  large  blocks  of  securities  among  a multitude 
of  investors  all  over  the  world,  and  this  necessity  brings  us  inevitably  to 
the  banking  community,  to  the  hated  Wall  Street,  for  access  to  the  money 
we  need  to  spend  in  the  South. 

I am  glad  to  be  assured  that  these  bankers  have  realized  that  the 


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South  is  the  coming  part  of  the  United  States,  and  so  are  confident  that 
they  can  safely  venture  their  reputation  in  distributing  the  securities  of 
Southern  Railway  Company  under  present  day  conditions.  I am  glad, 
too,  to  believe  that  I have  their  personal  confidence  and  that  they  will 
listen  to  my  recommendations.  They  have  already  supplied  fifteen 
million  dollars  of  absolutely  new  money  on  such  recommendation  since 
the  first  of  January  last,  and  they  are  ready  to  supply  more  for  further* 
improvement  of  the  Southern  Railway  plant.  All  of  this  is  to  be  spent 
for  the  South,  most  of  it  in  the  South,  in  such  ways  that  eventually  it 
will  seep  into  the  accounts  of  many  Southern  merchants,  just  as  the  pro- 
ceeds of  a large  crop  eventually  reach  the  merchants.  Every  one  whom 
I now  address  has  an  interest  in  the  disbursement  of  this  money  and  in 
what  will  result  in  the  way  of  personal  convenience  and  facility  for 
doing  business  from  its  expenditure.  It  is  as  if  a new  crop  worth  fifteen 
million  dollars  had  been  produced  in  the  South  this  winter.  Think  what 
the  rejoicing  would  have  been  if  it  had  been  a crop ! 

It  is,  then,  of  great  importance  to  you  and  to  me  and  to  all  the  people 
of  the  South  to  have  and  to  hold  the  confidence  of  these  bankers.  The 
way  to  accomplish  that  is  simple.  I do  not  propose  an  investigation  of 
the  bankers’  business.  I do  not  even  propose  a new  statute  to  compel 
them  to  supply  us  with  money:  that  might  be  the  simplest  way,  but  it 
appears  that  no  investigation  nor  any  statute  has  yet  been  devised  to 
make  a banker  invest  where  he  does  not  want  to  invest:  such  a miracle 
is  apparently  one  of  the  few  things  which  neither  an  investigation  nor  a 
statute  can  be  made  to  perform.  The  bankers  do  not  ask  any  gratitude, 
any  lip  service,  for  they  expect  to  get  their  reward  in  the  form  of  a 
commission : that  is  their  business.  They  do . not  expect  to  control  the 
railways  as  the  popular  imagination  pictures  them  as  doing:  to  make 
rates  and  initiate  policies  affecting  the  welfare  of  thousands  of  people. 
Never  in  my  personal  experience  with  them,  and  it  has  been  an  intense 
experience  over  many  years,  have  I heard  a suggestion  of  that  kind  of 
interference,  nor  have  I experienced  an  attempt  to  exercise  such  power 
through  the  control  of  the  sources  of  money: 

In  a prosperous  community  there  is  only  one  condition  of  the  bankers’ 
co-operation,  but  it  is  an  essential  one — that  the  public  shall  be  as  fair 
in  the  treatment  of  invested  capital  as  it  has  demanded  that  those  who 
control  invested  capital  shall  be  fair  to  the  public. 

Personally,  I have  no  doubt  that  we  in  the  South  shall  meet  the  con- 
dition and  get  all  the  money  we  need. 


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